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The Challenges to Aspiring Afro-Brazilian Entrepreneurs

January 10, 2012

Brazil’s black community faces many social and political problems, but a lack of economic opportunities is what most prevents this population from climbing the income ladder. According to Brazil’s National Association of Collective Black Entrepreneurs (Associação Nacional dos Coletivos de Empreendedores Negros, or ANCEABRA), the majority of Afro-Brazilians are in the informal workforce because of a lack of opportunities in the formal sector. Many Afro-Brazilians also face difficulty in opening legitimate, lasting businesses, with ANCEABRA reporting that only 3.8 percent of Afro-Brazilians identify professionally as entrepreneurs.

Why are Afro-Brazilians unsuccessful as entrepreneurs? Three factors are at play: a lack of societal encouragement to become entrepreneurs; family members without any history in creating their own enterprises; and, above all, the persistent difficulty of accessing capital. Brazil also has never had a public policy that sought to specifically promote black-managed enterprises.

This systemic problem presents a form of “black invisibility” in the business sector. This invisibility stands in stark contrast to Brazil’s position as one of the top-five countries in terms of entrepreneurship. Brazil’s enviable ranking puts it ahead of several enterprising European countries—yet most of these Brazilian enterprises are neither started nor managed by Afro-Brazilians.

But there’s more to this great challenge. A survey by the Ethos Institute showed that female Afro-Brazilians comprise only 0.5 percent of the top corporate executives of the 500 largest companies in Brazil. Our country, which proudly presents itself as a multicultural and multiracial nation, is ranking behind nations with similar ethnic compositions.

In the United States, the African-American community is responsible for generating 1.9 million businesses—reflecting the stronger purchasing power of this demographic. According to a September 2011 report by Nielsen, “The State of the African-American Consumer,” the purchasing power of the African-American community in 2015 will be $1.1 trillion. This buying power contributes to an economic engine that will help lift the U.S. out of economic recession.

South Africa—a country that went through decades of institutionalized segregation—has undertaken legislative measures to create a black entrepreneurial middle class.

On example: the Black Economic Empowerment (BEE) initiative. This law ensures that any company that enters into a contract with the federal government is required to do the following: hire black employees among the management team; promote executive education courses for black employees; and only outsource services to other BEE-participating companies. As a result, this policy has contributed to greater income equality in South Africa.

In Brazil, the purchasing power of the black community also increased significantly in the last decade. Public data and a study by the Fundo Baobá nongovernmental organization note that about 100 million Brazilians of African origin are generating roughly 673 billion reais (nearly US$361 billion).

But the potential for Afro-Brazilians is even higher. Solutions that promote greater entrepreneurship among Afro-Brazilians will generate more wealth, reduce the inequality gap and thus help the continued prosperity for all Brazilians.

The 2014 FIFA World Cup and the 2016 Olympic Games are ideal opportunities to promote socially inclusive policies for Afro-Brazilians. A robust black entrepreneurial market in Brazil can be created through venture capital, joint ventures and angel investors.

Afro-Brazilian youth have the desire to launch these enterprises, but the thousands that graduate from college each year need an economic stimulus to fulfill their dreams. For example, Afro-Brazilians are very familiar with Brazil’s tourism and entertainment industries; blacks are the face of Brazil abroad with our diverse culture, music and history. Cosmetics and fashion are other big potential markets for the creation of black businesses. The Instituto Feira Preta, founded 10 years ago in São Paulo, is an exemplar of this type of potential.

As part of Brazil’s economic boom, it makes political and economic sense to enact a genuine policy of social inclusion by way of entrepreneurship. If we don’t seize the moment, Brazil might continue for another 50 years with unfair economic inequality.

President Dilma Rousseff had a slogan: “País rico é país sem miséria” (“a rich country is a country without poverty”). But we should also say: “País sem miséria é país empreendedor” (“a country without poverty is an entrepreneurial country”).

For this, Brazil needs proper buy-in from the public and private sectors—then a wave of entrepreneurship can really happen.